UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Securities Act of 1933
Release No. 7459 / September 29, 1997
Securities Exchange Act of 1934
Release No. 39145 / September 29, 1997
Investment Advisers Act of 1940
Release No. 1673 / September, 1997
Administrative Proceeding File No. 3-9448
In the Matter of Abraham and Sons Capital, Inc. and Brett G. Brubaker
The Securities and Exchange Commission ("Commission") today announced
the institution of administrative and cease-and-desist proceedings against
Abraham and Sons Capital, Inc. ("ASCI"), a registered investment adviser,
and ASCI's president and sole officer, Brett G. Brubaker ("Brubaker"). The
Commission charged that during the second half of 1995, ASCI and Brubaker
provided investors in a private hedge fund with false information about the
fund's performance and the value of the investors' investments. The
Commission further alleged that ASCI and Brubaker provided this false
information to an investor in connection with the $1 million purchase of
additional securities in the hedge fund. Finally, the Commission alleged
that ASCI violated Rule 206(4)-2 by having custody of clients funds and
failing to have the funds verified at least once during the year.
The Commission's Order alleges that at the beginning of June 1995, the
hedge fund, Abraham and Sons Limited Partnership (the Fund), had a net
asset value of approximately $12.8 million and approximately 50 limited
partners. The Order further alleges that from June 1995 through December
1995, the Fund lost about half of its value and that while the Fund's value
was plummeting, ASCI and Brubaker misrepresented that the Fund was earning
money.
The Order alleges that ASCI and Brubaker violated the antifraud
provisions of the Securities Act of 1933 (Section 17(a)); the Securities
Exchange Act of 1934 (Section 10(b) and Rule 10b-5 thereunder); and the
Investment Advisers Act of 1940 (Advisers Act) (Sections 206(1) and
206(2)). The Order further alleges that ASCI violated, and that Brubaker
aided and abetted ASCI's violations of, the custody provisions of the
Advisers Act (Section 206(4) and Rule 206(4)-2 thereunder).
A hearing will be held to determine whether these allegations are
true, and, if so, to determine what remedial sanctions are appropriate and
in the public interest.
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